Finance Secretary Carlos Dominguez III has said at around 85 out 0f 100 Filipino families are covered by the government’s subsidy programs amounting to P256 billion for the country’s most vulnerable sectors hit the hardest by the economic impact of the coronavirus disease 2019 (COVID-19) pandemic.
These state subsidies cover some 18 million poor and low-income households that survive mainly on the informal economy’s “no-work, no-pay” setup. This very large population segment, around 75% of all Filipino families, is receiving a total of P205 billion in cash grants. In addition, 3.4 million workers in the formal sector employed in small businesses will receive wage subsidies amounting to a combined P51 billion.
Both these subsidy programs will be for a period of two months, as President Duterte gives No. 1 priority during this global health crisis to saving lives and extending lifelines to the sectors most affected by the sudden stop of economic activity when the national and local governments imposed containment measures in a bid to prevent the quick spread of COVID-19.
“We are about 24.6 million families all in all in the Philippines. So we are practically covering around 85 percent,” said Dominguez in response to a query on how many Filipinos are covered by the government’s emergency subsidy programs during Thursday night’s PTV4 public affairs program hosted by Presidential Communications Secretary Martin Andanar.
“What are not covered are families whose members are working for large businesses, in particular the top 2,745 firms, and families whose members are working for the government, both national and local. They comprise the remaining 15 percent of families,” the Finance chief added.
The public affairs show discussed the mechanics, details and eligibility criteria for the Small Business Wage Subsidy (SBWS) program launched by the government on April 16 for the 3.4 million employees who are not able to work as a result of the Enhanced Community Quarantine (ECQ) implemented by the government in the entire Luzon and other parts of the country.
The wage subsidies to be given will range from P5,000 to P8,00o per month for two months depending on the regions where the workers are employed.
“A few weeks ago, we began distributing the largest social program in the country’s history–a P205-billion social amelioration program for informal sector families,” Dominguez said. “However, we also recognize that providing a lifeline to small businesses and their employees is critical to keeping the economy afloat.”
Dominguez said that since March 2020, the government has asked the private sector to help their workers.
But he pointed out that because small businesses have limited or no revenues during the quarantine, they do not have enough cash to pay for the salaries of their workers, rent, loan amortizations and other expenses.
The government has mandated grace periods for rental payments and loans to ease the economic impact of the COVID-19 pandemic on individuals and businesses.
“Through this wage subsidy, we are now helping their employees, mostly from the lower middle class, meet their basic needs, like food and medicine. Second, and just as important, we are helping these employees keep their jobs. The Small Business Wage Subsidy is an integral part of a support package that we are rolling out for small businesses,” Dominguez said.
He said the two other components of the Small Business Relief Program (SBRP) are a proposed credit guarantee to enable micro, small and medium enterprises (MSMEs) to access bank financing more easily, and proposed legislation for a longer net operating loss carryover (NOLCO) of five years to help small businesses cope with their losses.
Finance Undersecretary Karl Kendrick Chua gave an overview of SBWS during the show, while Bureau of Internal Revenue (BIR) Deputy Commissioner Arnel Guballa and Social Security System (SSS) president-CEO Aurora Cruz Ignacio discussed the details of applying for the program.
Full instructions on availing of the program may be found on this page on the SSS website: bit.ly/SmallBusinessWageSubsidyProgram.
Applicants may also view the instructions on the official Facebook pages of the Department of Finance (DOF), SSS and BIR.
The DOF has also provided a downloadable file on its website detailing the step-by-step process on applying for the SBWS.
Under the SBWS, an eligible employee must fulfill the following requirements to qualify for the cash grant: be an employee of an eligible small business; employed and active as of March 1, 2020 but unable to work because of the ECQ; did not get paid by their employer for at least two weeks during the temporary closure or suspension of work in accordance with Labor Advisory No. 1, Series of 2020; can be of any contract status (e.g., regular, probationary, regular seasonal, project-based, fixed-term); and be certified by the employer in the application as having met all the above criteria.
Those who are not eligible are the following: Working from home or part of the skeleton force; on leave for the entire duration of the ECQ, whether with or without pay; already a recipient of SSS unemployment benefits due to COVID-19, to avoid duplication; those who have already settled or processing their SSS final claims (funeral, retirement, death, and total disability).
The owner or operator of the small business will be the one to apply on behalf of the eligible workers.
The employer must first check the BIR website to see if his or her company is qualified under the SBWS. A qualified corporation, partnership or sole proprietorship will be able to generate a passcode that will be used to access the SSS website where the application of the eligible employees will be processed.
According to the DOF, all existing businesses– whether single proprietorship, partnership or corporation–that satisfy the following criteria may apply for the program: 1) must not be in the BIR’s Large Taxpayer Service (LTS) list; and 2) those in non-essential industries that are forced to stop operations (i.e., temporary closure or suspension of work) and those in quasi-essential industries that are allowed to operate a skeletal force can apply for the wage subsidy for employees who are not able to work and did not get paid during the ECQ or other forms of quarantine put in place by local government units (LGUs).
Those that are BIR-registered and complying with tax obligations during the past three years up to January 2020 and are SSS-registered that have paid SSS contributions for the past three years up to January 2020 (the last recorded contribution) will be prioritized under the SBWS.
The link to the SBWS application on the SSS website provides a step-by-step process on applying for the wage subsidy program.
Ignacio said the application period to avail of the wage subsidy is from April 16 to 30.
Distribution of the first tranche of subsidies will be from May 1 to May 15. The second tranche will be given from May 16 to 31, which is dependent on whether the ECQ is lifted at an earlier date or is extended by the President.
To avoid duplication, beneficiaries of the COVID-19 Adjustment Measures Program (CAMP) of the Department of Labor and Employment (DOLE) who have already received their P5,000 CAMP benefit will only be eligible for a one-month wage subsidy under the SBWS program.
The eligible employee will be able to receive the subsidies via the following methods of his or her choice: 1) Withdrawal via employee’s SSS UMID cards enrolled as automated teller machine (ATM) cards; 2) Withdrawal from employee’s bank account for PESOnet-participating banks; 3) Employee’s Union Bank Quick Card (partnership with SSS); 4) Employee’s E-wallet: PayMaya; and 5) Cash pick-up arrangement through remittance transfer companies.
As the wage subsidy will primarily be given out through the employees’ bank accounts, Ignacio encouraged SSS members to update their bank account or e-wallet details on their my.SSS account, as these will be the primary mode of distribution.
“For employees with no existing bank or e-wallet account, the wage subsidy will be provided through cash pick-up arrangements in remittance transfer companies. In order to avail of this option, the employee must first enroll his or her mobile number with SSS via the member my.SSS account,” Ignacio added.
Both the employer and employees will be notified if they have qualified under the wage subsidy program.
Dominguez said the DOF estimates that some 393,095 small businesses were forced to stop operating while some 1 million are only able to operate with skeletal forces after the national government placed Metro Manila and, later, the rest of Luzon, under ECQ, and local government units (LGUs) have imposed similar containment measures in their respective localities.
Only around 161,102 essential small businesses such as those involved in food service, logistics and some retail outlets like drugstores and supermarkets, have been allowed to operate during the ECQ, he said.
Dominguez said that utilizing the existing SSS and BIR systems have allowed the government to better target and identify affected small businesses and their employees, monitor and evaluate the impact of the program, and more efficiently deliver the subsidy in the future, should the quarantine be extended.